Top 3 Business Lessons from Diapers.com

I read a fascinating article recently in Inc. Magazine about diapers.com, a five year old online business that this year made the Inc. 500 of the top 500 fastest growing private U.S. companies.

Diapers.com CEO Marc Lore discussed his day to day life running the business and I gleaned three key lessons to share with you.

1. Superb customer service. The business spends about 10 percent of their marketing budget on flowers, gift certificates, massages and other goodies for their best customers. If a customer service rep sees that someone has been a really good customer and has referred other parents to them, they have the authority to send them a gift.

Do you empower your employees in this way? Or if you are a solo entrepreneur, do you consistently give gifts, rewards and other “thank you’s” to your best customers?

2. Fanatical data tracking and analysis. Prior to launching the company, Marc and his co-founder Vinit Bharara did extensive analysis of all aspects of their business including what the optimal number of boxes should be in their warehouse and what size the boxes should be. They took action on the results of their analysis and bit by bit added margin points. Their gross margins started at 4.6% and now are in the teens!

I’ve seen too many entrepreneurs neglect to pay close enough attention to their margins and it either drove them out of business eventually or caused them to net much, much less profit than they should have and could have.
Do you analyze your operations and review expenses regularly, with an eye to improving your margins?

3. Planning, visualizing and not much TV watching. Of his ambitious five-year plan, Marc says he “visualizes the path over and over again.” In the evenings, between family responsibilities, Marc researches, analyzes and plans things like pay-per-click and other elements of his business. A typical entrepreneur, Marc said “I don’t really watch TV at all. I much prefer working.” And part of his daily work is focusing on those all so critical “important, not urgent” areas of the business.

If you’re stuck all the time in do-do-do with no time to think, research, study, plan and strategize, your business will fall short of its potential.

Do you schedule time daily or weekly to focus and do quality thinking about the vitally important areas of your business (not just always putting out fires)?

I invite you to see if you need to strengthen your business in one or more of these areas. There’s no time like the present. As always, let me know if I can help.